How Wholesale Distributors Achieve Best-in-Class Sales Growth

What does it mean to achieve Best-in-Class sales performance? And what is the financial upside for a wholesale distributor to achieve this level of performance?

Research performed for the Sales Excellence Report surfaced the data that answered these questions.

A survey was used to capture wholesale distribution sales performance results, including revenue growth, revenue plan attainment, customer share expansion, and the salesforce opportunity win rate. Based on these results, respondents were categorized into one of three performance archetypes:

  • Best-in-Class scored in the top 15%
  • Medians scored in the middle 50%
  • Laggards scored in the lower 35%

The questionnaire also captured data related to the strategies, processes and technologies used by respondents. This data was then correlated with revenue results and the performance archetypes. Measuring these relationships allowed us to understand what methods most impacted revenue results, and what the Best in Class cohort did differently than their lower performing peers.

Measuring Best-in-Class Wholesale Distribution Sales Performance

The following data measurements show the performance gains achieved by Best in Class leaders.

Sales Growth

Based on the most recent three-year average, the top performance group achieved an average 11.8 percent annual sales growth rate. That was an impressive 198 percent higher than the combined average of the Laggard and Median archetypes.

Wholesale Distribution Sales Growth

Revenue Plan Achievement

Meeting expectations of management, shareholders and other stakeholders begins with achieving the annual revenue target.

The below chart shows the percentage of distributors that achieved their annual revenue plan.

Wholesale Distribution Revenue Plan

Customer Share Expansion

In contrast to several other industries, wholesale distributors realize the majority of company growth from existing customers.

That makes improving customer share, increasing customer lifetime value and decreasing customer churn mission critical imperatives. The below column chart shows the amount of annual customer share expansion by performance archetype.

Wholesale Distribution Customer Share

Opportunity Win Rate

The sale opportunity win rate shows the percentage of opportunities won. It's an efficiency metric that measures closures relative to pursuits.

The top performers achieved an average 18 percent higher win rate than the average of the combined Medians and Laggards. That's a significant factor that delivers a linear impact to revenue growth.

However, one factor that should be noted is that most wholesale distributor sales pipelines consist largely of opportunities to existing customers. That increases the overall win rate, as on average, existing customer win rates were 5.5 percent higher than new customer acquisition win rates.

Wholesale Distribution Sale Win Rate

Opportunity win rate is a powerful measure because increasing conversions improves short term revenues and creates a multiplier impact to long term revenue growth. Even small improvements to the sale win rate deliver large increases to top line revenue. Improving the win rate is also far more effective and less costly than just playing the numbers game of increasing the volume of selling pursuits.

For most distributors, increasing the sale win rate is the fastest path to significant and sustained revenue growth.

Wholesale Distribution Sales Performance Best Practices

Now you know what best-in-class sales performance looks like. So, the next question may be how to achieve these results for your wholesale distribution company.

The research answered that question by analyzing data that measured company strategies, operational processes and technology utilization. That analysis identified nine programs that delivered the most significant uplift to sales performance and most separated the Best-In-Class archetype from their peers.

These nine growth programs are referred to as evidence-based best practices and described below.

1

Selling Methodology

A selling methodology shifts your sales strategy from what you sell to how you sell. It positions your most powerful capabilities in producing customer value, including your competitive advantages, unique value proposition (UVP) and core competencies.

Respondents with optimized sale methodologies earned an average 12 percent higher sales win rate than peers with less formal selling methods. They were also 1.8 times more likely to achieve annual revenue growth and 1.6 times more likely to achieve their annual revenue target.

2

Predictable Sales Process

Most companies have a defined selling process. However, the research found that most of those processes do not deliver predictable results.

But those that did have prescribed and predictable processes achieved an average 11 percent higher win rate than those who did not. They were also 49 percent more likely to achieve their quota.

Optimized and repeatable processes fast-track seller onboarding time, increase staff productivity, focus limited time on the best opportunities, accelerate selling velocity, lower cost per customer acquisition, improve forecasting and most importantly, increase opportunity conversions.

3

Strategic Account Management

Strategic Account Management is a time tested approach to increase customer share over extended periods. This selling method uses account plans as blueprints for planned customer expansion and future sales.

The research found that only 24 percent of companies have adopted formal or defined Strategic Account Management programs. But those adopters achieved 27 percent higher revenue growth with existing customers than peers without these programs.

4

Active Sales Plans

The sales plan shows the actions to achieve the annual revenue objective. For most companies, it's a roadmap that plots the most direct path to achieving the annual revenue goal.

The research found that almost all respondents created annual sales plans. However, for most laggards and medians it was a one-and-done paper exercise. That was different than the Best-in-Class which advised they actively used the plan as an operating tool throughout the period. The plan was used to measure progress, identify variances and implement swift course corrections as needed to meet the financial target.

5

Opportunity Win Plans

The average sale opportunity win rate was 52 percent. The average opportunity win rate for sellers that consistently used win plans was 57 percent.

The research found that only 19 percent of sellers consistently use opportunity win plans. However, that minority achieved a 6 percent higher win rate and 12 percent higher quota attainment. The Best in Class leaders consistently prepared sales win plans about two times more frequently than Medians.

6

Customer Retention

Managing customer retention is an imperative to achieve a sustainable wholesale distributor business. In fact, for many companies, customer retention has become a top business growth strategy.

The research found that that the top performers achieved 97 percent customer retention. That was 3 points higher than Medians and 6 points higher than Laggards.

It also found that many companies reduced churn by identifying customers at risk and injecting some type of save procedure. However, many of the top performers went a step further and identified the root causes of attrition. That permitted them to fix the reasons for churn at the source and thereby eliminate most of their churn.

7

Price Optimization

While only 12 percent of companies routinely calculated price elasticity for a majority of their goods, 83 percent of that group were Best in Class leaders.

The combination of a defined pricing strategy and active price optimization program increased revenue growth 2 to 4 percent. Distributors with active price optimization programs were 37 percent more likely to achieve annual revenue growth.

8

Sales Coaching

The goals of coaching are to develop each seller's potential and grow the cumulative revenue impact of the team. Coaching was the single greatest contributing factor to improved staff productivity.

However, not all coaching programs delivered a positive ROI. Only 23 percent of participants with irregular sales coaching reported a positive ROI. But that figure more than tripled to 78 percent for managers that brought structure and regular cadence to their programs.

9

Predictive Analytics

Pretty much all companies used some form of analytics. But while most relied on static reporting built on historical data, the top performers more often shifted their information from hindsight to foresight.

They were 2.1 times more likely to use interactive reporting, 2.9 times more likely to use predictive analytics, and 3.7 times more likely to integrate AI into their decision support.

Wholesale Distribution Best Practices for Sales Improvement

Replicating any one of the above best practices will achieve an incremental improvement. That may be sufficient for some executives.

Other business leaders may seek to create more linear uplift and deliver more significant and sustained company growth.

That requires a holistic approach which can be achieved by reproducing a mix of the evidence-based best practices.

The research was conclusive in showing the leaders excelled in at least five, and on average, 7.5 of the nine best practices.

Wholesale Distribution Best Practices

The More You Know, the Faster You Grow

Selling recommendations without supporting data are just opinions. The 9 evidence-based best practices shown above are sourced from field research and demonstrate what the top performing sellers do differently than their lower performing peers.

When you start with data-driven findings, learn from those that have achieved the highest success and apply their methods to repeat that performance, you avoid trial and error, and pursue the straightest and shortest route to targeted results.

And one more thing.

Most survey participants indicated they adopted all or most of the 9 best practices.

However, survey questions that drilled into operational processes suggested otherwise. The research reinforced there is a big difference between adoption, which is often a casual participation, and dedication which creates expertise.

Dedication requires disciplined programs with executive sponsorship, budgeted resources, enabling technology, performance analytics and continuous improvements. Dedication advances from being a generalist to becoming a specialist.

And when the criteria for dedicated programs were considered, only the Best in Class archetype engaged in 7 or more of the best practices.